Post Hoc Analysis

Customer participation . In a post hoc analysis, we used

b = –.32

OLS regression to find factors that increase the customer’s participation in suppliers’ collaborative projects. We

e Sh (n.s.)

regressed customer participation on all the control variables

as well as three customer-related variables: the length of the

customer’s relationship with the focal supplier, the depen-

b = –.48

dence of the customer on the focal supplier, and whether the

li e (p < .05)

customer (vs. suppliers) initiated the collaborative project

(the same as the instrumental variables used in the 2SLS

p Su

High customer participation

regression analysis). The results indicate that the level of

Low customer participation

customer participation is greater in supplier collaborations initiated by the customer than in those initiated by suppliers

Low

High

(b = 1.11; t = 3.20, p < .01). In addition, the customer’s

Knowledge Base Compatibility

dependence on the focal supplier (b = .32; t = 2.31, p < .05) and the length of the customer’s relationship with the focal

B: High Customer Value Condition

supplier (b = –.90; t = 1.89, p < .10) are related to customer participation. No control variable has a significant effect.

b = .61

Collaborative performance . Although we do not for-

g (p < .01)

mally hypothesize the effect of supplier knowledge sharing

on collaborative project performance, we tested this impor-

ri a

tant relationship. Using OLS regression, we regressed col-

e Sh

laborative project performance on supplier knowledge shar-

ing and all the control variables. The results indicate that

d le

knowledge sharing has a significant and positive effect on o 2 w performance (b = .25; t = 2.12, p < .05; R = .41; F = 6.24).

b = –.41

(n.s.)

Among the control variables, the focal supplier–customer

li e r

relationship closeness (b = .52; t = 4.40, p < .01) and supplier partners’ transaction-specific investments (b = .27; t =

1.78, p < .10) have significant and positive effects. No other

High customer participation Low customer participation

control variable has a significant effect. These results indicate that knowledge sharing helps supplier partners achieve

Low

High

greater collaborative performance and that the performance

Knowledge Base Compatibility

increment can be explained only partially by supplier partners’ resource commitment and the focal supplier’s relationship with the customer.

customer value and knowledge base compatibility is significant (b = .23; t = 2.08, p < .05), suggesting that the simple

Discussion

slope of knowledge base compatibility is greater in the high customer value condition than in the low customer value

Collaborations among competing suppliers within a cus- condition, while customer participation is at the mean.

tomer’s supplier network have become increasingly important to improve supplier productivity and meet the customer’s

Thus, H 2 is supported. sophisticated procurement needs. However, existing empiri- Finally, among the control variables, transaction-specific

cal studies on such collaborations are scarce and confined investments have a significant and positive effect on sup-

to reports of best practices and analysis of limited cases plier knowledge sharing (b = .50; t = 6.26, p < .01). This

(e.g., Dyer and Nobeoka 2000; Wu, Choi, and Rungtu- result suggests that transaction-specific investments act as

sanatham 2010).

safeguards that can promote greater knowledge sharing. In To advance the understanding of this phenomenon for addition, the focal supplier’s dependence on the customer

academics and managers, this research investigates the col- (b = .18; t = 1.86, p < .10) and the relative power between

laborative effort between two competing suppliers serving a the supplier partners (b = –.13; t = 1.65, p < .10) are also

downstream OEM customer in a business-to-business con-

102 / Journal of Marketing, November 2013 102 / Journal of Marketing, November 2013

We examine these three factors jointly because each of them provides a necessary but insufficient condition for supplier knowledge sharing to occur. We tested the research hypotheses using data gathered from a scenario-based experiment and a survey study. In these two studies, we controlled for key extraneous factors including those related to the relationship between the supplier partners and the relationship between the focal supplier and the customer. Similar patterns of results appear across the two studies. Therefore, our empirical findings are robust and valid.

The results from the two studies provide strong empirical evidence in support of the hypothesized three-way inter- action between knowledge base compatibility, customer participation, and anticipated customer value. Specifically, the results show that knowledge base compatibility has a positive impact on supplier partners’ knowledge sharing when both anticipated customer value and customer participation are high. In contrast, knowledge base compatibility is negatively associated with knowledge sharing when anticipated customer value is low but customer participation is high. In addition, when customer participation is low, irrespective of the level of anticipated customer value, knowledge base compatibility has no significant effect on supplier knowledge sharing. These findings demonstrate that knowledge base compatibility can help or hinder supplier knowledge sharing under different motivating conditions. Importantly, our findings reveal that in a supplier collaboration serving a common customer, customer-related factors such as customer participation and anticipated customer value can alter the impact of knowledge base compatibility on supplier knowledge sharing from positive to null to negative. Previous research on knowledge transfer in collaborative partnerships has mainly used secondary data such as patent citations as a proxy for knowledge transfer (e.g., Mowery, Oxley, and Silverman 1996). In this regard, the present study provides new and direct evidence of both the beneficial and detrimental consequences of supplier partners’ overlapping knowledge bases for knowledge sharing. In addition, this study identifies the boundary conditions of the effects of knowledge base compatibility.

Our research sheds light on the governance role of the customer in coopetitive supplier partnerships. We argue that the hazards arising from overlapping knowledge bases dis- courage supplier partners from participating in knowledge

Knowledge Base Compatibility / 103

exchange activities. Drawing on extant literature, we con- jecture that customer participation in the suppliers’ collaborative effort could engender collective trust and cooperative norms within the triadic partnership (Wu, Choi, and Rung- tusanatham 2010). We also suggest that supplier partners’ reputation and future business opportunities lead to self- control (Parkhe 1993). These social processes would mitigate supplier partners’ concerns for opportunism. As a result, customer participation motivates supplier partners to focus on exploiting the learning efficiency advantages of compatible knowledge bases rather than on the potential hazards, resulting in greater supplier knowledge sharing. Although the two empirical studies do not explicitly examine the occurrence of the micro governance processes, the results after ruling out the effects of alternative governance mechanisms, including transaction-specific investments and prior relationships, are consistent with our predictions. Therefore, customer participation has a unique explanatory power for supplier knowledge sharing, and the results provide tentative evidence in support of the governance role of customer participation.

This research also identifies the conditions that could increase a customer’s participation in its suppliers’ collaborative efforts. The post hoc analysis results suggest that when the customer initiates the supplier collaboration, the customer depends on the suppliers for resources, and the relationship length between the customer and the suppliers is relatively short, the customer is more likely to engage in suppliers’ collaborative arrangements. Overall, this research not only demonstrates the importance of customer participation in supplier collaboration but also provides prelimi- nary evidence on factors that drive such participation.

Finally, the post hoc analysis shows that supplier knowledge sharing significantly contributes to collaborative performance in terms of fulfilling the customer’s procurement needs. This performance enhancement can only be partially explained by the amount of resources the supplier partners invest into the collaborative effort.

Managerial Implications

This research offers several broad managerial insights. First, we discuss the dilemma that suppliers encounter when they collaborate with partners that have overlapping and compatible knowledge bases. Although compatibility sim- plifies and facilitates the exchange of information, ideas, and tacit know-how, resulting in greater knowledge transfer and positive collaborative outcomes, it also creates a greater risk of knowledge misappropriation. Therefore, suppliers must understand the implications of choosing a partner with similar know-how and capabilities. Suppliers should also note that when the collaboration involves exchanging mostly tacit know-how such as that embedded in capabilities (Ganesan, Malter, and Rindfleisch 2005), high knowledge base compatibility is an essential condition for effective knowledge transfer to occur. Paradoxically, because knowledge embedded in capabilities holds strategic value, any unintended leakage could cause substantial damage to the suppliers. Thus, suppliers face a serious dilemma when sharing skills and capabilities with their partners. The This research offers several broad managerial insights. First, we discuss the dilemma that suppliers encounter when they collaborate with partners that have overlapping and compatible knowledge bases. Although compatibility sim- plifies and facilitates the exchange of information, ideas, and tacit know-how, resulting in greater knowledge transfer and positive collaborative outcomes, it also creates a greater risk of knowledge misappropriation. Therefore, suppliers must understand the implications of choosing a partner with similar know-how and capabilities. Suppliers should also note that when the collaboration involves exchanging mostly tacit know-how such as that embedded in capabilities (Ganesan, Malter, and Rindfleisch 2005), high knowledge base compatibility is an essential condition for effective knowledge transfer to occur. Paradoxically, because knowledge embedded in capabilities holds strategic value, any unintended leakage could cause substantial damage to the suppliers. Thus, suppliers face a serious dilemma when sharing skills and capabilities with their partners. The

Second, suppliers should systematically evaluate the benefits and costs of sharing knowledge with partners. Although knowledge sharing contributes to positive collaborative outcomes, it also entails substantial costs in establishing routines and governance, especially for long-term partnerships. Suppliers must develop knowledge-sharing routines to facilitate knowledge flow across organization boundaries and set up task forces or assign specific personnel to over- see knowledge-sharing activities. Simultaneously, suppliers must assess the likelihood and potential damage of unintended knowledge spillover and choose an effective governance mechanism. Suppliers should understand the efficacy and implementation costs of different types of formal and informal safeguards and select the governance mechanism that aligns with the goals of the collaborative effort and the collaborative history of the partners.

Third, our findings suggest that customer participation likely tempers supplier partners’ concern for partner opportunism, thus ensuring the learning efficiency advantages of compatible knowledge bases between supplier partners. Nevertheless, suppliers should understand the circum- stances under which they can rely on customer participation as a feasible safeguard. First, a customer might not have sufficient motivation or legitimate power to participate in its suppliers’ collaborative arrangement. Second, suppliers might lack the bargaining power to prescribe the activities with which the customer should get involved. Therefore, suppliers face challenges in evaluating the efficacy of governance processes the customer can introduce in the collaborative arrangement before its formation. Suppliers should take these issues into consideration in planning for partnerships.

For the customer firm, this research underscores the importance of motivating supplier partners to share valuable knowledge in their collaborative efforts. Because rivals cannot imitate or easily acquire effective supplier partnerships, customers should attempt to facilitate the development of collaborative partnerships among their suppliers. To motivate supplier partners to exchange valuable know- how, the customer (if it has legitimate power and expertise) should take part in such activities as mediating conflicts, providing technical consultation, and dedicating engineers to supplier sites. Importantly, the customer’s participatory actions should aim not only to improve collaborative effec- tiveness but also to nurture collective trust and cooperative norms among the suppliers. In addition, customers must understand suppliers’ opportunity and motivation concerns with respect to knowledge sharing so that they can offer incentives and formulate policies to overcome suppliers’ fears and resistance. For example, customers can establish a supplier association and use it as a platform for increasing opportunities for suppliers to access one another’s technical expertise and problem-solving experience. Customers can also share new product, manufacturing, and technological knowledge with suppliers through supplier development programs. As the literature has suggested, such programs

104 / Journal of Marketing, November 2013

not only enhance supplier capabilities but also promote social interactions and reciprocity norms among the customer and suppliers (Cheung, Myers, and Mentzer 2011). Over time, a cohesive supplier community can emerge, con- ferring competitive advantages on the customer (Dyer and Nobeoka 2000).

This research also suggests that a customer should recog- nize that the value the supplier partners expect their collaboration to create and its own participation level are motivating factors that increase supplier partners’ willingness to take part in knowledge-sharing efforts. However, the customer must be aware that if supplier partners are uncertain about the strategic value of the collaboration for the customer, they may consider some of the customer’s participatory activities intrusive and overbearing, resulting in resistance and negative consequences. Therefore, to benefit from the learning-efficiency advantages of supplier partners’ overlapping knowledge bases, a customer should explicitly dis- close to its suppliers the long-term strategic value of the collaborative partnership and convince them that its participatory actions could help prevent partner opportunism and mitigate exchange hazards.

Limitations

This research has several limitations. First, we examined knowledge sharing between supplier partners in a collaborative partnership aimed at serving a downstream OEM customer. However, we did not evaluate how collaborative goals and other factors affect suppliers’ intention to form a partnership in the first place. Second, we assessed the inde- pendent and dependent variables of the conceptual model from a single supplier’s perspective. Because the data col- lected are not dyadic, the focal supplier’s perceptions may not be identical to those of the partner supplier. In addition, the items used to measure collaborative project performance and supplier knowledge sharing in Study 2 were rather broad. We did not capture specific types of knowledge (e.g., product or process knowledge) shared between the supplier partners. Because we did not restrict the scope and purpose (e.g., new product development, process refinement) of the supplier collaborations we examined, we could not develop measures that would reliably capture specific types of shared knowledge and specific collaborative performance criteria.

Third, this study did not address the implications of various knowledge characteristics, such as complexity, depth, and breadth, for supplier knowledge sharing. These characteristics may facilitate or impede the process of knowledge sharing independently or interact with knowledge base compatibility. Fourth, this study examined the impact of customer participation on suppliers’ collaborative efforts without addressing the customer’s motivations for participation. In addition, although we argue that customer participation can mitigate supplier opportunism, our empirical studies did not directly capture the incidences of such microprocesses in the supplier collaboration.

Post Hoc Analysis